AUGUST 11, 2014

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Advertising
Native Advertising Tests Better on Entertainment Sites than News Sites

In what might be the most comprehensive piece of consumer research published to date on native advertising/sponsored content, IAB and Edelman Berland form some conclusions on how to best position sponsored content for audiences. Their study measured 5,000 online news media consumers placed into three groups based on the sites they visit: business news visitors (websites covering finance, business, economics, investing & technology), entertainment (media, entertainment, celebrities, lifestyle & fashion) and general news (breaking news, politics, world news, U.S. news & local news). The respondents were then served real-world examples of sponsored content presented on the types of news sites listed above in a desktop environment; social media sites were not included. For the most part, consumers of business and entertainment news sites were able to identify what was sponsored content, as more than 80% of them correctly identified the content as sponsored. News consumers had more difficulty identifying the sponsored content as just 41% said it was clearly paid for by an advertiser. The business (45%) and entertainment (44%) visitors were also more likely to say that sponsored content adds value to the site experience than news visitors (27%). In turn, perceptions of the brand being advertised on business and entertainment sites were more likely to be favorable (for relevancy, brand authority and trustworthiness) than brands being advertised on news sites. 

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So what?

We are finally seeing research published on consumer response to native advertising/sponsored content and with that some consensus of best practices should develop. In addition to the necessity for native advertising to be relevant to the content on its host site, publishers must account for a consumer's expectations of their sites. This research suggests that sponsored content better aligns with entertainment and business sites than it does with news sites. While Condé Nast and its brands cover a range of categories and topics, these findings might help build a spectrum used to determine which types of articles or pages would allow for sponsored content to be well received.

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Automotive
Auto Category Continues to Show Growth

2013 was a good year for carmakers as more than 15 million vehicles (passenger cars & light trucks) were sold in the United States -- an 8% gain over the previous year. And the category is not slowing down much in 2014 according to the latest figures released from auto sales tracker Autodata. Through the end of July, 9.6 million vehicles had been sold, 5% ahead of last year's pace. While an incredibly successful 2013 has made it hard for some carmakers to duplicate the impressive gains, Chrysler (+13.3%), Nissan (+12.6%), Daimler AG (+8.9%), Toyota (+6.1%) and BMW (+5.6%) are still outpacing the category-level growth. Americans continue to gravitate to light trucks as that sub-category has grown by 9% this year and more light trucks have been sold than passenger cars this year.

So what?

There might be a few explanations for the growth auto has shown over the past couple of years -- better incentives from brands, a necessity to replace cars as the average one on the road has never been older, greater consumer optimism, etc. Whatever the reasons might be for specific brands, growth is happening across a range of price points and it seems to be a period of good momentum for an important advertising category.

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Demographics
Americans’ Net Wealth Struggles to Regain Pre-Recession Levels

Compared with a decade ago, the average American household is worth a third less. A study of wealth post-recession completed by the Russell Sage Foundation found that in 2003 the median inflation-adjusted net worth was $87,992 and by 2013, the median net worth had declined 36% to $56,335. In 2007, prior to the recession, most Americans’ worth peaked, showing a more significant decline from 2007 to 2013. The median worth has declined 43%, from its peak of $98,872, over the last six years. Among the wealthy households in the top 75th percentile, their net worth went from $302,221 in 2003 to $367,959 in 2007 to $260,405 in 2013. While the most wealthy (those in the 90th and 95th percentiles) saw their net worth increase overall from 2003 to 2013, their 2013 worth was significantly less than their worth in 2007. Those in the 90th percentile had $763,099 in 2013, on average, compared to $934,223 in 2007.

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So what?

Although consumer optimism is rising and almost at pre-recession levels, overall Americans’ wealth has not bounced back. The average family, across all wealth levels, has a lower net worth than they did in 2007. Keeping this in mind, marketers should incorporate messaging around the value and quality of products and brands to help convince consumers that have grown more fiscally conscientious across the board. Furthermore, marketers of luxury goods need to remain thoughtful about their advertising strategy, as rising levels of wealth inequality suggest more selectivity in media.

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Social Media
Can Companies Leverage Social Influencers to Spread Their Message?

Publishers and advertisers use social networks to generate buzz and, if they are lucky, make content go viral. One popular tactic to do so is by collaborating with influencers who spread the content among their followers and drive social chatter. However, a study from professors at MIT and London Business School suggests that targeting influencers is not always the best solution. The researchers focused on two groups of people: those who posted on a trending topic on the day it emerged (early trend propagators) and those who posted on the three following days (late trend propagators). They targeted promoted tweets to the two groups, and analyzed how often these tweets were retweeted and clicked. The findings were surprising: early trend propagators were significantly less likely to respond to the promoted tweets than late trend propagators. The researchers explained that early trend propagators like to make their own unguided choices and view company-sponsored tweets as an attempt to manipulate them. This hypothesis was supported by the fact that the negative effect was not observed among early trend propagators who tweeted about commercially-endorsed trending topics (“promoted trends”), since they are more open to sponsored messages.

So what?

Influencer endorsements are powerful, and Condé Nast brands like The New Yorker and Glamour have seen tens of thousands of visitors flocking to their sites from the tweets of the likes of Conan O’Brien and Olivia Wilde. However, if a company wants influencers to actively share its content, targeting them with promoted ads seems ineffective. More old-fashioned methods, like reaching out to them directly, will probably yield better results.

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Quick Takes
Top Male Actors Have Made Significantly More than Top Female Actors this Year
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Source: Forbes, Statista
ESPN is the Most Expensive Cable Network by Wide Margin

3net is a 3D TV channel by Discovery, Sony and IMAX.

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Source: SNL Kagan, Wall Street Journal
Showing Increased Positivity, Nearly Half of American Consumers Say Now is a Good/Excellent Time to Buy Things Needed & Wanted
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Source: Nielsen
Compared to Cash, Americans Now Both Transact and Spend More with Credit Cards
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Source: Federal Reserve, Business Insider
Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 | philip_paparella@condenast.com

Contributors:
Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights